29 Aug 2019 07:03
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR").
Watchstone Group plc
Counterclaim filed against Slater & Gordon (UK) 1 Limited
Further to its previous announcements on 14 June 2017 and 12 October 2017, Watchstone Group plc (LON:WTG) ("Watchstone") announces that, following permission being granted by the High Court, it is today serving and filing an Amended Defence and Counterclaim in the High Court proceedings issued by Slater & Gordon (UK) 1 Limited ("S&G").
The counterclaim against S&G is currently for damages of at least £63m plus exemplary damages, interest and costs for breach of confidence, inducing breach of contract, and unlawful means conspiracy ("Counterclaim"). The Counterclaim arises from the recent discovery via third party disclosure of an illicit back channel that Greenhill & Co ("Greenhill"), a corporate finance adviser to S&G, procured during the period of due diligence and negotiation with Watchstone's then group restructuring and technical accounting adviser, PricewaterhouseCoopers ("PwC").
Watchstone claims that at S&G's behest and/or on its behalf and/or with its knowledge and authorisation and/or ratification, its agent Greenhill established a 'back-channel' with PwC, Watchstone's trusted adviser by a series of secret meetings between representatives of Greenhill and PwC, at which it unlawfully obtained information pertaining to Watchstone's wider group which was, and which it knew to be, confidential. S&G (and Greenhill on its behalf) then factored that information into its tactics and strategy for the negotiations with Watchstone leading to the acquisition of the Professional Services Division ("PSD") which is the subject of these proceedings, thereby gaining an unfair advantage in those negotiations, which it exploited in order to purchase the PSD at a lower price than it would otherwise have had to pay. S&G thereby planned to, and did cause, Watchstone to suffer significant loss.
Watchstone informed the Court that it had not been told by S&G (including in its disclosure and witness statements in these proceedings) or anyone else about the back-channel referred to above, and was therefore unaware that its confidential information had been provided to Greenhill and S&G until it received third party disclosure from Greenhill in these proceedings on 19 July 2019 almost three years after S&G's claim was first threatened.
At a one-day hearing on 28 August 2019 in the Commercial Court in London, S&G submitted that Watchstone should not be permitted to amend its Defence or to bring the Counterclaim.
Mr Justice Bryan rejected S&G's submission and found that Watchstone has a real prospect of success in respect of the proposed Counterclaim and other amendments such that permission to bring such claims within the existing proceedings should be given. The Judge also rejected S&G's request that, even if the Counterclaim was permitted, it should be stayed pending the determination of the trial. The Judge ordered that Watchstone's claims in relation to the back channel, including its Counterclaim, are to be heard at the same time as the trial of S&G's claims starting on 21 October 2019.
The Amended Defence and Counterclaim will be served and filed today. Once filed it will be available on written application to the Commercial Court, alternatively online at the HM Courts & Tribunals e-filing Service: HMCTS e-filing service at https://efile.cefile-app.com/login, subject to the payment of the prescribed fee. The claim number is CL-2017-000348, High Court of Justice, Queens Bench Division, Commercial Court.
Watchstone will make further announcements in due course, as appropriate.
The release of this announcement has been authorised by Stefan Borson, Group Chief Executive Officer and Company Secretary of the Company.
For further information:
Watchstone Group plc | Tel: +44 (0)20 7930 8033 |
Alex Nekrassov alexnekrassov@newcenturymedia.co.uk
WH Ireland LLP, Nominated Adviser and Broker |
Tel: +44 (0)20 7220 1666 |
Chris Hardie Lydia Zychowska |
Notes to editors:
On 14 June 2017, Watchstone was served with High Court proceedings issued by S&G for breach of warranty and/or fraudulent misrepresentation for a total amount of up to £637m plus interest in damages in respect of the disposal of the PSD in 2015. Watchstone denies any misrepresentation in the strongest terms and remains satisfied that neither the warranty claim nor the misrepresentation claim have merit and will defend such claims robustly.